UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-KSB
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(Mark one)
[X] Annual Report Under Section 13 or 15(d) of The Securities Exchange
Act of 1934
For the fiscal year ended September 30, 2004
[ ] Transition Report Under Section 13 or 15(d) of The Securities Exchange
Act of 1934
For the transition period from ______________ to _____________
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Commission File Number: 0-14247
Century Park Pictures Corporation
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1458152
(State of incorporation) (IRS Employer ID Number)
4701 IDS Center, Minneapolis, Minnesota, 55402
(Address of principal executive offices) (Zip Code)
(612) 333-5100
(Issuer's telephone number)
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Securities registered under Section 12 (b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock: $0.001 par value
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Check whether the issuer has (1) filed all reports required to be files by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period the Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Company's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
The issuer's revenues for the fiscal year ended September 30, 2004 was $-0-.
The aggregate market value of voting common equity held by non-affiliates as of
November 2, 2004 was approximately $816,800, based upon only limited and
sporadic quotations, not to exceed $0.10, on the Company's common stock.
As of November 2, 2004, there were 72,456,441 shares of Common Stock issued and
outstanding.
Transitional Small Business Disclosure Format : Yes [ ] No [X]
CENTURY PARK PICTURES CORPORATION
TABLE OF CONTENTS
Page
----
PART I
Item 1 - Description of Business 3
Item 2 - Description of Property 4
Item 3 - Legal Proceedings 4
Item 4 - Submission of Matters to a Vote of Security Holders 4
PART II
Item 5 - Market for Company's Common Stock and Related Stockholders Matters 4
Item 6 - Management's Discussion and Analysis or Plan of Operation 5
Item 7 - Financial Statements 7
Item 8 - Changes in and Disagreements with Accountant on Accounting and
Financial Disclosures 7
Item 8A - Controls and Procedures 7
PART III
Item 9 - Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 8
Item 10 - Executive Compensation 9
Item 11 - Security Ownership of Certain Beneficial Owners And Management 10
Item 12 - Certain Relationships and Related Transactions 10
Item 13 - Exhibits and Reports on Form 8-K 10
Item 14 - Principal Accountant's Fees and Services 11
SIGNATURES 12
2
CAUTION REGARDING FORWARD-LOOKING INFORMATION
All statements contained in this Form 10-KSB, other than statements of
historical facts, that address future activities, events or developments are
forward-looking statements, including, but not limited to, statements containing
the words "believe," "anticipate," "expect" and words of similar import. These
statements are based on certain assumptions and analyses made by us in light of
our experience and our assessment of historical trends, current conditions and
expected future developments as well as other factors we believe are appropriate
under the circumstances. However, whether actual results will conform to the
expectations and predictions of management is subject to a number of risks and
uncertainties that may cause actual results to differ materially.
Such risks include, among others, the following: international, national and
local general economic and market conditions: our ability to sustain, manage or
forecast our growth; raw material costs and availability; new product
development and introduction; existing government regulations and changes in, or
the failure to comply with, government regulations; adverse publicity;
competition; the loss of significant customers or suppliers; fluctuations and
difficulty in forecasting operating results; changes in business strategy or
development plans; business disruptions; the ability to attract and retain
qualified personnel; the ability to protect technology; and other factors
referenced in this and previous filings.
Consequently, all of the forward-looking statements made in this Form 10-KSB are
qualified by these cautionary statements and there can be no assurance that the
actual results anticipated by management will be realized or, even if
substantially realized, that they will have the expected consequences to or
effects on our business operations.
As used in this Form 10-KSB, unless the context requires otherwise, "we" or "us"
or the "Company" means Century Park Pictures Corporation.
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
General
In prior years, the Company developed, produced and marketed various
entertainment properties, including without limitation, the intellectual
product(s) of entities engaged in the motion picture, television, and theatrical
state productions, such as creative writers, producers and directors, for the
motion picture, pay/cable and commercial television markets and, until September
1995 through its then 50.1% owned subsidiary, Willy Bietak Productions, Inc.
("WBPI"), produced and operated small touring ice shows and theme shows
appearing in theaters, casinos, and major amusement parks and arenas. On
September 29, 1995, in consideration of guarantees of certain bank debt of WBPI,
provided WBPI by its minority shareholder, the Company transferred 65,900 of its
shares of WBPI common stock to such minority shareholder, thereby reducing the
Company's interest to 30%. Until December 1998, a wholly-owned subsidiary,
International Theatres Corporation ("ITC"), of the Company operated the
Chanhassen Dinner Theatre in Chanhassen, Minnesota which the Company acquired in
1993.
On December 17, 1998, the Board of Directors passed a resolution to transfer the
Company's interest in ITC and its remaining interest in WBPI to the Company's
CEO as repayment of $100,000 on account of advances made to the Company by the
Company's CEO. In setting the $100,000 amount, the Board of Directors obtained
and relied upon an independent market analysis of ITC and WBPI by Lingate
Financial Group, a Minnesota corporation.
The Company may be unable to continue as a going concern without raising
additional funds from outside sources. Management is uncertain as to the
likelihood of raising additional funds. (See Liquidity and Sources of Capital
for Further Discussion.)
The Company was organized under Minnesota law in 1983. The Company's executive
offices are located at 4701 IDS Center, Minneapolis, Minnesota 55402 and its
telephone number is (612) 333-5100.
3
The Company has no operations as of the date of this filing and is seeking a
suitable business combination transaction through either acquisition or merger.
Accordingly, the Company's has only one identifiable business segment.
Description of Former Business Operations
In prior years, the Company was involved in the production of various
entertainment properties for motion picture, pay/cable and commercial
television. The Company has limited its costs to those incurred prior to the
commencement of principal photography, either at a studio or on selected
site(s). It has been the Company's intention to produce or co-produce and
arrange for the distribution of primarily feature length motion pictures with
production financing derived from third party sources. The Company has reported
no revenues from motion pictures, pay/cable and television since 1998. At
September 30, 2002, the Company had two (2) properties of which only one of
which was substantially completed. All entertainment properties have been
charged to expense in prior years.
The profits of an enterprise involved in the entertainment industry generally
and, particularly, the motion picture, television and music industries are
greatly dependent upon the audience appeal of each creative product, compared
with the cost of such product's purchase, development, production and
distribution. Competition is intense both within the motion picture and
television industry and other entertainment media. The Company is in competition
with major film studios, as well as with numerous "independent" motion picture
and television production companies for the acquisition of artistic properties,
and the services of artistic, creative and technical personnel. The Company is
unaware of any recognized approach to determined its or any participants'
position in these industries. Moreover, the Company's financial resources does
not suggest that it would be considered a "major participant in these
industries.
ITEM 2 - DESCRIPTION OF PROPERTY
The Company leases, as its headquarters, 1,941 square feet of office space at
4701 IDS Center, Minneapolis, Minnesota 55402. Due to the limited operations of
the Company and insignificant amount of office space required at this time,
affiliates of the Company are presently utilizing virtually all of the available
space in this facility and are responsible for the rental payments.
ITEM 3 - LEGAL PROCEEDINGS
The Company is not involved in any material legal proceedings.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this Annual Report.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Since the first quarter 1996, there has been no established public trading
market for the Company's common shares. There have been only very limited or
sporadic quotations and none exceed $0.10 per share.
As of November 2, 2004, there are approximately 526 separate holders of record
of the Company's common stock, exclusive of shares held in street name.
4
The Registrant has never paid any cash dividends on its Common Stock and does
not plan to pay any cash dividends in the foreseeable future.
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
We have had no revenue for either of the years ended September 30, 2004 and
2003.
YEAR ENDED SEPTEMBER 30, 2004 COMPARED TO YEAR ENDED SEPTEMBER 30, 2003
General and administrative expenses for the years ended September 30, 2004 and
2003 were approximately $12,000 and $60,000, respectively. The principal
component of these expenditures was the accrual of interest on outstanding notes
payable and operating expenses related to maintaining the Company's compliance
with the Securities Exchange Act of 1934. Interest expense for the years ended
September 30, 2004 and 2003 was approximately $2,100 in each respective year.
Included in interest expense for Fiscal 2004 and 2003 is approximately $2,100
and $41,000 in imputed interest calculated as a result of the respective
noteholders agreeing to discontinue their rights to interest subsequent to July
31, 2002.
The Company's expenditures consist solely of items necessary to comply with the
Company's periodic reporting obligations under the Securities Exchange Act of
1934 and are not necessarily reflective of what may be expected in future
periods when the Company either commences more extensive business operations or
acquires another operating entity through either acquisition or merger.
On December 3, 2003, upon the failure to timely convert or post a timely claim
for repayment, the Company's Board of Directors, acting upon the advise of legal
counsel, voided the remaining outstanding unconverted notes payable aggregating
approximately $50,000 and the associated accrued interest of approximately
$36,956 and recognized a one-time gain on the technical forgiveness of these
debts.
YEAR ENDED SEPTEMBER 30, 2003 COMPARED TO YEAR ENDED SEPTEMBER 30, 2002
General and administrative expenses for the years ended September 30, 2002 and
2001 were approximately $60,000 and $59,000, respectively. The principal
component of these expenditures was the accrual of interest on $400,000 in
outstanding notes payable. Interest expense for the years ended September 30,
2003 and 2002was approximately $41,000 and $51,500, respectively. Included in
interest expense is approximately $41,000 and $8,585 in imputed interest
calculated as a result of the respective noteholders agreeing to discontinue
their rights to interest subsequent to July 31, 2002.
The Company's expenditures consist solely of items necessary to comply with the
Company's periodic reporting obligations under the Securities Exchange Act of
1934 and are not necessarily reflective of what may be expected in future
periods when the Company either commences more extensive business operations or
acquires another operating entity through either acquisition or merger.
LIQUIDITY AND CAPITAL RESOURCES
Cash used by continuing operating activities for the years ended September 30,
2004 and 2002 was approximately $9,800 and $19,000, respectively. These cash
requirements have been provided by advances from the Company's Chief Executive
Officer. For all periods prior to October 1, 2001, these advances have been
treated as additional paid-in capital. Commencing October 1, 2001, the Company's
Chief Executive Officer has made these advances as working capital advances
which are repayable upon demand at some undesignated future date and are
non-interest bearing.
Management intends to continue to restrict expenditures with respect to the
future development of entertainment properties and to market its completed
properties. The Company has two completed properties. The costs of development
have been written off. Accordingly, the Company will incur little, if any, costs
5
of marketing. Management believes these actions may contribute to the Company's
liquidity. The Company has no material commitments for capital expenditures as
of September 30, 2004.
It is the intent of the Company's Chief Executive Officer and/or significant
stockholders to provide sufficient working capital necessary to support and
preserve the integrity of the corporate entity. However, no formal commitments
or arrangements to advance or loan funds to the Company or repay any such
advances or loans exist. There is no legal obligation for either management or
significant stockholders to provide additional future funding.
The Company intends to continue to seek out potential acquisitions; however, the
Company is not in discussion with any potential acquisition candidate. The
Company has no existing credit facilities to facilitate such activities. Any
future acquisition is anticipated to be financed with "to be negotiated" senior
bank financing, composing approximately 60% of the transaction, with the
remainder to be financed through a combination of other debt and equity
instruments. There are no assurances that the Company will successfully identify
these or any other potential acquisitions or that, if identified, it will obtain
financing under terms acceptable to or affordable by the Company. Management
presently considers a business combination transaction, through either an
acquisition or merger, to be a viable situation.
OUTSTANDING NOTES PAYABLE
During 1996, the Company raised approximately $400,000 through promissory notes
to support the operations of Minnesota Arena Football, Inc. dba Minnesota
Fighting Pike (Pike), a former 100.0% owned subsidiary. The Pike was an indoor
professional football team that operations on August 31, 1996. This subsidiary
was legally dissolved as of December 31, 1999. Of the notes, approximately
$350,000 was raised from unrelated third party investors and approximately
$50,000 was raised from the Tom Scallen, the Company's Chief Executive Officer.
The notes bear interest at rates ranging between 12.0% to 15.0% and were secured
by the Company's right, title, and interest in the Pike. The notes originally
matured between June and December 1996. The Company remains liable for the
$400,000 in outstanding debt.
On July 31, 2002, the Company's Board of Directors and the respective
noteholders approved the extension of the ultimate maturity date of the notes
through December 3, 2003. In conjunction with the extension, the noteholders
agreed to discontinue the accrual of interest subsequent to July 31, 2002. The
effect of the discontinuance of interest accruals subsequent to July 31, 2002
will be charged to operations as a component of interest expense with an offset
to contributed additional paid-in capital to recognize the economic effect of
these notes in the respective future period.
The noteholders have the right to convert, at any time at the holder's option,
all outstanding principal, accrued, but unpaid, interest as of July 31, 2002
into shares of the Company's restricted, unregistered common stock at a
conversion rate of $0.01 per share.
On June 25, 2003, noteholders aggregating $300,000 in outstanding principal and
$231,900 in accrued interest payable exercised their respective conversion
rights and received an aggregate 53,106,900 shares of restricted, common stock
upon conversion.
On December 3, 2003, the final ultimate maturity date, one remaining noteholder
exercised his conversion rights and converted approximately $50,000 in principal
and $36,758 in accrued interest payable into 8,675,800 shares of restricted,
unregistered common stock.
On December 3, 2003, upon the failure to timely convert or post a timely claim
for repayment, the Company's Board of Directors, acting upon the advise of legal
counsel, voided the remaining outstanding unconverted notes payable of
approximately $50,000 and the associated accrued interest of approximately
$36,956 and recognized a one-time gain on the technical forgiveness of these
debts.
6
GOING CONCERN ISSUES
The Company's independent auditors issued their respective opinions on the
Company's financial statements for the years ended September 30, 2004 and 2002,
respectively, which included an explanatory paragraph as to substantial doubt
about the Company's ability to continue as a going concern. This doubt was
raised primarily due to recurring losses from operations, the Company's
stockholder's deficit of approximately $392,000 at September 30, 2004, and to no
ongoing operations.
INFLATION
Inflation and changing prices have not had a significant impact on operations
of the Company to date.
ITEM 7 - FINANCIAL STATEMENTS
The required accompanying financial statements begin on page F-1 of this
document.
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 8A - CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to
the filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's President
and Chief Executive and Chief Financial Officer. Based upon that evaluation, the
Company's President and Chief Executive and Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective. There have
been no significant changes in the Company's internal controls or in other
factors, which could significantly affect internal controls subsequent to the
date the Company carried out its evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive and Financial Officer as appropriate, to allow timely decisions
regarding required disclosure.
(Remainder of this page left blank intentionally)
7
PART III
ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The directors and executive officers serving the Company are as follows:
Name Age Position Held and Tenure
---- --- ------------------------
Philip Rogers 70 President, Director since 1983
Thomas K. Scallen 79 Chief Executive Officer and
Chairman of the Board since 1983
Willy Bietak 57 Director since 1992
Mr. Rogers became President and Director upon the Company's formation in 1983.
Mr. Rogers is also a principal of Philipico Picture Company, a motion picture
and television production company.
Mr. Scallen became Chairman of the Board of Directors, Vice President, and
Treasurer of the Company upon its formation in 1983. Mr. Scallen was elected
Chief Executive Officer of the Company on March 14, 1992. Mr. Scallen assumed
the responsibilities of chief financial officer in 1998. Mr. Scallen was
president, director and principal stockholder of International Broadcasting
Corporation, a publicly traded company engaged in entertainment activities, the
presentation of touring shows, arena shows and motion picture or television
productions until March 1992. International Broadcasting Corporation filed for
protection under Chapter 11 of the Bankruptcy Act in August 1991.
Mr. Bietak became a Director of the Company in 1992. He is President of Willy
Bietak Productions, Inc. and has been associated with the Company since 1986.
The Company's Directors, as named above, will serve until the next annual
meeting of the Company's stockholders or until their successors are duly elected
and have qualified. Directors will be elected for one-year terms at the annual
stockholders meeting. Officers will hold their positions at the pleasure of the
board of directors, absent any employment agreement, of which none currently
exists or is contemplated. There is no arrangement or understanding between any
of the directors or officers of the Company and any other person pursuant to
which any director or officer was or is to be selected as a director or officer,
and there is no arrangement, plan or understanding as to whether non-management
shareholders will exercise their voting rights to continue to elect the current
directors to the Company's board. There are also no arrangements, agreements or
understandings between non-management shareholders that may directly or
indirectly participate in or influence the management of the Company's affairs.
The directors and officers will devote their time to the Company's affairs on an
as needed basis, which, depending on the circumstances, could amount to as
little as two hours per month, or more than forty hours per month, but more than
likely will fall within the range of five to ten hours per month. There are no
agreements or understandings for any officer or director to resign at the
request of another person, and none of the officers or directors are acting on
behalf of, or will act at the direction of, any other person.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who
beneficially own more than ten percent of a registered class of our equity
securities, to file with the Securities and Exchange Commission (the
"Commission") initial reports of beneficial ownership and reports of changes in
beneficial ownership of our Common Stock. The rules promulgated by the
Commission under Section 16(a) of the Exchange Act require those persons to
furnish us with copies of all reports filed with the Commission pursuant to
Section 16(a). The information in this section is based solely upon a review of
Forms 3, Forms 4, and Forms 5 received by us.
8
During the year ended September 30, 2002, the Company is unaware of any action
which would require the filing of either a Form 3, Form 4 or Form 5 by any
required person, as defined in Section 16(a).
During the year ended September 30, 2003, the Company issued an aggregate
53,106,900 shares of restricted, unregistered common stock to various
individuals in settlement of various convertible notes payable and accrued
interest. None of the parties listed below, constituting recipients of 5.0% or
more of the Company's outstanding common stock, post transaction, to the best of
the Company's knowledge, has filed the respective Form 3, Form 4 or Form 5, as
necessary, related to these transactions:
Anthony Silverman 22,047,100 shares
Fred Burnstein 8,700,500 shares
Thomas K. Scallen 7,491,700 shares
Thomas F. Miller 8,674,800 shares
Mark Leibovit 2,227,500 shares
Alice Wintz Leibovit Living Trust 2,227,500 shares
During the year ended September 30, 2004, the Company issued 8,675,800 and
787,100 shares of restricted, unregistered stock, respectively, to Mark
Rosenberg in settlement of two (2) convertible notes payable and accrued
interest and to Thomas K. Scallen as compensation associated with the conversion
of the outstanding notes payable and accrued interest payable. Mr. Rosenberg and
Mr. Scallen, constituting recipients of 5.0% or more of the Company's
outstanding stock, post transaction, to the best of the Company's knowledge, has
filed the respective Form 3, Form 4 or Form 5, as necessary, related to these
transactions.
Mark Rosenberg 8,675,800 shares
Thomas K. Scallen 787,100 shares
ITEM 10 - EXECUTIVE COMPENSATION
There was no cash compensation paid during either of the respective years ended
December 31, 2004, 2003 or 2002.
We issued our President, Thomas K. Scallen, 787,100 shares of unregistered,
restricted common stock as compensation associated with the conversion of the
outstanding notes payable and accrued interest payable. This transaction was
valued at approximately $7,871, which was equal to the "fair value" of the
Company's common stock on the conversion date. The Company relied upon Section
4(2) of The Securities Act of 1933, as amended, for an exemption from
registration of these shares and no underwriter was used in this transaction..
None of the Company's current or former officers or directors receives or has
received any salary from Company during the preceding five years. The Company
does not anticipate entering into employment agreements with any of its officers
or directors in the near future. Directors do not receive compensation for their
services as directors and are not reimbursed for expenses incurred in attending
board meeting.
DIRECTOR COMPENSATION
The Company's Directors have not received any cash compensation during the years
ended September 30, 2004 or 2003.
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as at September 30, 2004, the information with
respect to common stock ownership of each person known to the Company to own
beneficially more than five percent (5%) of the shares of the Company's common
stock and all Directors and Officers as a group.
9
% of Class
Name and address Number of Shares Beneficially Owned
---------------- ---------------- ------------------
Anthony Silverman
7305 E. DeAcero Drive
Phoenix AZ 85028 22,047,100 30.43%
Thomas K. Scallen
4701 IDS Center
Minneapolis MN 55402 9,898,280 13.66%
Mark Rosenberg
6516 E. Montreal Place
Scottsdale AZ 85254 8,755,800 12.08%
Fred Burnstein
2900 Norwest Center
510 First Avenue, Suite 610
Minneapolis MN 55402 8,700,500 12.01%
Thomas F. Miller
13015 Star Ridge Drive
Sun City West AZ 85375 8,674,800 11.97%
Mark Leibovit and
Alice Wintz Leibovit Living Trust, collectively
4701 IDS Center
Minneapolis MN 55402 4,455,000 6.15%
Philip Rogers
3575 Cahuenga Blvd. W.
Los Angeles CA 90068 99,375 0.14%
All Officers and Directors
as a Group (three (3) in number) 9,997,655 13.80%
ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During each of the years ended September 30, 2004 and 2003, the Company's Chief
Executive Officer advanced the Company approximately $9,850 and $19,000,
respectively, to support operations, settle outstanding trade accounts payable
and provide working capital. The advance is repayable upon demand and is
non-interest bearing and is unsecured.
As of September 30, 2004 and 2003, respectively, the Company owed the Company's
Chief Executive Officer approximately $354,500 for cumulative accrued salary.
ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
3 Articles of Incorporation and By-Laws are incorporated by reference to the
Exhibits to the Registrant's Registration Statement of September 15, 1983
4 Rights of warrant holders set forth in Exhibits to Registration
No.33-58546, effective April 12, 1993, incorporated by this reference.
10
10 Stock Purchase Agreement, dated July 29, 1993 between registrant and
International Broadcasting Corporation, International Theatres Corporation
and National Westminster Bank USA attached as an Exhibit to Registrant's
Report on Form 8-K is incorporated by this reference
24 Manually signed powers of attorney for members of the Board of Directors,
filed herewith are incorporated by this reference.
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Reports on Form 8-K
None
ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Company paid or accrued the following fees in each of the prior two fiscal
years to it's principal accountant, S. W. Hatfield, CPA of Dallas, Texas
Year ended Year ended
September 30, September 30,
2004 2003
------ ------
1. Audit fees $5,512 $8,094
2. Audit-related fees -- --
3. Tax fees --
4. All other fees -- --
------ ------
Totals $5,512 $8,094
====== ======
The Company has no formal audit committee. However, as defined in Sarbanes-Oxley
Act of 2002, the entire Board of Directors is the Company's defacto audit
committee.
In discharging its oversight responsibility as to the audit process, the Board
obtained from the independent auditors a formal written statement describing all
relationships between the auditors and the Company that might bear on the
auditors' independence as required by Independence Standards Board Standard No.
1, "Independence Discussions with Audit Committees." The Board discussed with
the auditors any relationships that may impact their objectivity and
independence, including fees for non-audit services, and satisfied itself as to
the auditors' independence. The Board also discussed with management and the
independent auditors the quality and adequacy of the Company's internal
controls. The Board reviewed with the independent auditors their management
letter on internal controls, if one was issued by the Company's auditors.
The Board discussed and reviewed with the independent auditors all matters
required to be discussed by auditing standards generally accepted in the United
States of America, including those described in Statement on Auditing Standards
No. 61, as amended, "Communication with Audit Committees".
The Board reviewed the audited financial statements of the Company as of and for
the years ended September 30, 2004 and 2003 with management and the independent
auditors. Management has the sole ultimate responsibility for the preparation of
the Company's financial statements and the independent auditors have the
responsibility for their examination of those statements.
Based on the above-mentioned review and discussions with the independent
auditors and management, the Board of Directors approved the Company's audited
financial statements and recommended that they be included in its Annual Report
on Form 10-KSB for the year ended September 30, 2004, for filing with the
Securities and Exchange Commission.
The Company's principal accountant, S. W. Hatfield, CPA did not engage any other
persons or firms other than the principal accountant's full-time, permanent
employees.
11
SIGNATURES
In accord with Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CENTURY PARK PICTURES CORPORATION
Dated: November 2, 2004 /s/ Thomas K. Scallen
---------------- -------------------------------------
Thomas K. Scallen
Chief Executive Officer
In accordance with the Securities Exchange Act of 1934, as amended, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Dated: November 2, 2004 /s/ Philip Rogers
---------------- -------------------------------------
Philip Rogers
President and Director
Dated: November 2, 2004 /s/ Thomas K. Scallen
---------------- -------------------------------------
Thomas K. Scallen
Chief Executive Officer
and Director
Dated: November 2, 2004 /s/ Willy Bietak
---------------- -------------------------------------
Willy Bietak
Director
12
CENTURY PARK PICTURES CORPORATION
CONTENTS
Page
----
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-2
FINANCIAL STATEMENTS
Balance Sheets
as of September 30, 2004 and 2003 F-4
Statements of Operations and Comprehensive Income (Loss)
for the years ended September 30, 2004 and 2003 F-5
Statement of Changes in Shareholders' Equity
for the years ended September 30, 2004 and 2003 F-6
Statements of Cash Flows
for the years ended September 30, 2004 and 2003 F-7
Notes to Financial Statements F-8
F-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Century Park Pictures Corporation
We have audited the accompanying balance sheets of Century Park Pictures
Corporation (a Minnesota corporation) as of September 30, 2004 and 2003 and the
related statements of operations and comprehensive loss, changes in
shareholders' equity and cash flows for each of the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Century Park Pictures
Corporation as of September 30, 2004 and 2003 and the results of its operations
and its cash flows for each of the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note C to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon significant shareholders to provide sufficient working
capital to maintain the integrity of the corporate entity. These circumstances
create substantial doubt about the Company's ability to continue as a going
concern. The financial statements do not contain any adjustments that might
result from the outcome of these uncertainties.
/s/ S. W. Hatfield, CPA
--------------------------
S. W. HATFIELD, CPA
Dallas, Texas
October 22, 2004
F-2
CENTURY PARK PICTURES CORPORATION
BALANCE SHEETS
September 30, 2004 and 2003
September 30, September 30,
2004 2003
----------- -----------
ASSETS
CURRENT ASSETS
Cash on hand and in bank $ -- $ --
----------- -----------
TOTAL CURRENT ASSETS -- --
----------- -----------
PROPERTY AND EQUIPMENT - AT COST
Furniture and fixtures 94,077 94,077
Less accumulated depreciation (94,077) (94,077)
----------- -----------
NET PROPERTY AND EQUIPMENT -- --
----------- -----------
OTHER ASSETS
Rent deposits 926 926
----------- -----------
TOTAL ASSETS $ 926 $ 926
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable $ -- $ 100,000
Accounts payable - trade 395 --
Accrued officer compensation 354,500 354,500
Accrued interest payable -- 73,714
Other accrued expenses -- 9,027
Advances from shareholder 37,744 27,887
----------- -----------
TOTAL CURRENT LIABILITIES 392,639 565,128
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock - $0.001 par value
200,000,000 shares authorized
72,456,441 and 62,993,541 shares
issued and outstanding, respectively 72,456 62,994
Additional paid-in capital 6,804,569 6,717,299
Accumulated deficit (7,268,738) (7,344,495)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) (391,713) (564,202)
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 926 $ 926
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-3
CENTURY PARK PICTURES CORPORATION
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Years ended September 30, 2004 and 2003
Year ended Year ended
September 30, September 30,
2004 2003
------------ ------------
REVENUES $ -- $ --
------------ ------------
EXPENSES
General and administrative expenses 9,095 19,022
------------ ------------
LOSS FROM OPERATIONS (9,095) (19,022)
OTHER EXPENSE
Interest expense (2,104) (41,005)
------------ ------------
LOSS BEFORE PROVISION FOR INCOME TAXES
AND EXTRAORDINARY ITEM (11,199) (60,027)
PROVISION FOR INCOME TAXES -- --
------------ ------------
LOSS BEFORE EXTRAORDINARY ITEM (11,199) (60,027)
EXTRAORDINARY ITEM
Extinguishment of notes payable and
accrued interest, net of income taxes 86,956 --
------------ ------------
NET INCOME (LOSS) 75,757 (60,027)
OTHER COMPREHENSIVE INCOME -- --
------------ ------------
COMPREHENSIVE INCOME (LOSS) $ 75,757 $ (60,027)
============ ============
Income (Loss) per weighted-average
share of common stock outstanding,
computed on Net Loss - basic and fully diluted
From continuing operations $ (0.00) $ (0.00)
From extraordinary item 0.00 0.00
------------ ------------
$ (0.00) $ (0.00)
============ ============
Weighted-average number of shares
of common stock outstanding 70,827,581 24,145,480
============ ============
The accompanying notes are an integral part of these financial statements.
F-4
CENTURY PARK PICTURES CORPORATION
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Years ended September 30, 2004 and 2003
Common Stock Additional
-------------------- paid-in Accumulated
Shares Amount capital deficit Total
------ ------ ------- ------- -----
BALANCES AT OCTOBER 1, 2002 9,886,641 $ 9,887 $6,191,566 $(7,284,468) $(1,083,015)
Conversion of notes payable
and accrued interest payable
to common stock 53,106,900 53,107 477,962 -- 531,069
Forgiveness of accrued interest -- -- 6,766 -- 6,766
Contribution of imputed interest
on suspended interest on
notes payable -- -- 41,005 -- 41,005
Net loss for the year -- -- -- (60,027) (60,027)
---------- ------- ---------- ----------- -----------
BALANCES AT SEPTEMBER 30, 2003 62,993,541 62,994 6,717,299 (7,344,495) (564,202)
Conversion of notes payable
and accrued interest payable
to common stock 8,675,800 8,675 78,082 -- 86,758
Contribution of imputed interest
on suspended interest on
notes payable -- -- 2,104 -- 2,104
Common stock issued for
debt conversion services 787,100 787 7,084 -- 7,871
Net loss for the year -- -- -- 75,757 75,757
---------- ------- ---------- ----------- -----------
BALANCES AT SEPTEMBER 30, 2004 72,456,441 $72,456 $6,804,569 $(7,268,738) $ (391,713)
========== ======= ========== =========== ===========
The accompanying notes are an integral part of these financial statements.
F-5
CENTURY PARK PICTURES CORPORATION
STATEMENTS OF CASH FLOWS
Years ended September 30, 2004 and 2003
Year ended Year ended
September 30, September 30,
2004 2003
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ 75,757 $(60,027)
Adjustments to reconcile net income to net cash
provided by operating activities
Extinguishment of notes payable and accrued interest (86,956) --
Consulting fees paid with common stock 7,870 --
Contribution of interest expense related to
suspended interest payable on notes payable 2,104 41,005
Increase (Decrease) in
Accounts payable 395 --
Other accrued expenses (9,027) --
Accrued interest payable -- --
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (9,857) (19,022)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES -- --
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Funds advanced by officer/shareholder 9,857 19,022
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 9,857 19,022
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS -- --
Cash and cash equivalents at beginning of period -- --
-------- --------
Cash and cash equivalents at end of period $ -- $ --
======== ========
SUPPLEMENTAL DISCLOSURES OF INTEREST AND INCOME TAXES PAID
Interest paid during the period $ -- $ --
======== ========
Income taxes paid (refunded) $ -- $ --
======== ========
The accompanying notes are an integral part of these financial statements.
F-6
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Century Park Pictures Corporation (Company) was incorporated in 1983 in
accordance with the Laws of the State of Minnesota.
In prior periods, the Company developed, produced and marketed various
entertainment properties, including without limitation, the intellectual
product(s) of entities engaged in the motion picture, television, and theatrical
state productions, such as creative writers, producers and directors, for the
motion picture, pay/cable and commercial television markets.
The Company has effectively had no operations, assets or liabilities since its
fiscal year ended September 30, 1999.
NOTE B - PREPARATION OF FINANCIAL STATEMENTS
The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America and has
adopted a year-end of September 30.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented
For segment reporting purposes, the Company operated in only one industry
segment during the periods represented in the accompanying financial statements
and makes all operating decisions and allocates resources based on the best
benefit to the Company as a whole.
NOTE C - GOING CONCERN UNCERTAINTY
The Company has effectively had no operations, assets or liabilities since its
fiscal year ended September 30, 1999.
The Company has no operating activities, no cash on hand, no profit and operates
a business plan with inherent risk. Because of these factors, our auditors have
issued an audit opinion for the Company which includes a statement describing
our going concern status. This means, in our auditor's opinion, substantial
doubt about our ability to continue as a going concern exists at the date of
their opinion.
The Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.
F-7
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE C - GOING CONCERN UNCERTAINTY - CONTINUED
The Company anticipates offering future sales of equity securities. However,
there is no assurance that the Company will be able to obtain additional funding
through the sales of additional equity securities or, that such funding, if
available, will be obtained on terms favorable to or affordable by the Company.
If no additional operating capital is received during the next twelve months,
the Company will be forced to rely on existing cash in the bank and upon
additional funds loaned by management and/or significant stockholders to
preserve the integrity of the corporate entity at this time. In the event, the
Company is unable to acquire advances from management and/or significant
stockholders, the Company's ongoing operations would be negatively impacted.
It is the intent of management and significant stockholders to provide
sufficient working capital necessary to support and preserve the integrity of
the corporate entity. However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding.
While the Company is of the opinion that good faith estimates of the Company's
ability to secure additional capital in the future to reach our goals have been
made, there is no guarantee that the Company will receive sufficient funding to
sustain operations or implement any future business plan steps.
NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Cash and cash equivalents
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, including accounts in book overdraft positions,
certificates of deposit and other highly-liquid investments with maturities
of three months or less, when purchased, to be cash and cash equivalents.
(2) Property and equipment
Property and equipment consists of furniture and fixtures and is stated at
the lower of depreciated cost or net realizable value.
3. Income Taxes
The Company uses the asset and liability method of accounting for income
taxes. At September 30, 2004 and 2003, respectively, the deferred tax asset
and deferred tax liability accounts, as recorded when material to the
financial statements, are entirely the result of temporary differences.
Temporary differences represent differences in the recognition of assets
and liabilities for tax and financial reporting purposes, primarily
accumulated depreciation and amortization, allowance for doubtful accounts
and vacation accruals.
As of September 30, 2004 and 2003, the deferred tax asset related to the
Company's net operating loss carryforward is fully reserved. Due to the
provisions of Internal Revenue Code Section 338, the Company may have
limited net operating loss carryforwards available to offset financial
statement or tax return taxable income in future periods as a result of any
future change in control involving 50 percentage points or more of the
issued and outstanding securities of the Company.
F-8
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
4. Income (Loss) per share
Basic earnings (loss) per share is computed by dividing the net income
(loss) available to common shareholders by the weighted-average number of
common shares outstanding during the respective period presented in our
accompanying financial statements. Fully diluted earnings (loss) per share
is computed similar to basic income (loss) per share except that the
denominator is increased to include the number of common stock equivalents
(primarily outstanding options and warrants). Common stock equivalents
represent the dilutive effect of the assumed exercise of the outstanding
stock options and warrants, using the treasury stock method, at either the
beginning of the respective period presented or the date of issuance,
whichever is later, and only if the common stock equivalents are considered
dilutive based upon the Company's net income (loss) position at the
calculation date.
The Company had no common stock equivalents outstanding at September 30,
2004 or 2003, respectively.
NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.
Interest rate risk is the risk that the Company's earnings are subject to
fluctuations in interest rates on either investments or on debt and is fully
dependent upon the volatility of these rates. The Company does not use
derivative instruments to moderate its exposure to interest rate risk, if any.
Financial risk is the risk that the Company's earnings are subject to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the volatility of these rates. The company does not use derivative
instruments to moderate its exposure to financial risk, if any.
NOTE F - NOTES PAYABLE
On July 31, 2002, the Company's Board of Directors and the respective
noteholders approved the extension of the ultimate maturity date of the notes
through December 3, 2003. In conjunction with the extension, the noteholders
agreed to discontinue the accrual of interest subsequent to July 31, 2002.
The effect of the discontinuance of interest accruals subsequent to July 31,
2002 will be charged to operations as a component of interest expense with an
offset to contributed additional paid-in capital to recognize the economic
effect of the suspended and forgiven interest on these notes in the respective
future period.
On June 25, 2003, noteholders aggregating $300,000 in outstanding principal and
$231,900 in accrued interest payable exercised their respective conversion
rights and received an aggregate 53,106,900 shares of restricted, common stock
upon conversion.
On December 3, 2003, the final ultimate maturity date, one remaining noteholder
exercised his conversion rights and converted approximately $50,000 in principal
and $36,758 in accrued interest payable into 8,675,800 shares of restricted,
unregistered common stock.
F-9
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE F - NOTES PAYABLE - CONTINUED
On December 3, 2003, upon the failure to timely convert or post a timely claim
for repayment, the Company's Board of Directors, acting upon the advise of legal
counsel, voided the remaining outstanding unconverted notes payable of
approximately $50,000 and the associated accrued interest of approximately
$36,956 and recognized a one-time gain on the technical forgiveness of these
debts.
For the respective years ended September 30, 2004 and 2003, the Company has
recognized approximately $2,104 and $41,005 in additional paid-in capital for
imputation of suspended interest on these notes.
NOTE G - RELATED PARTY TRANSACTIONS
Through September 30, 2004, the Company's Chief Executive Officer has advanced
the Company approximately $37,744 to support operations, settle outstanding
trade accounts payable and provide working capital. The advance is repayable
upon demand and is non-interest bearing and is unsecured.
As of September 30, 2004 and 2003, respectively, the Company owed the Company's
Chief Executive Officer approximately $354,500 for cumulative accrued salary.
NOTE H - INCOME TAXES
The components of income tax (benefit) expense for the years ended September 30,
2004 and 2003, respectively, are as follows:
Year ended Year ended
September 30, September 30,
2004 2003
------------ ------------
Federal:
Current $ -- $ --
Deferred -- --
------------ ------------
-- --
------------ ------------
State:
Current -- --
Deferred -- --
------------ ------------
-- --
------------ ------------
Total $ -- $ --
============ ============
As of September 30, 2004, the Company has a Federal net operating loss
carryforward of approximately $3,100,000 and a State net operating loss
carryforward of approximately $790,000 to offset future taxable income. Subject
to current regulations, these carryforwards will expire between 2002 and 2015.
(Remainder of this page left blank intentionally)
F-10
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE H - INCOME TAXES - CONTINUED
The Company's income tax expense for each of the years ended September 30, 2004
and 2003, respectively, differed from the statutory federal rate of 34 percent
as follows:
Year ended Year ended
September 30, September 30,
2004 2003
-------- --------
Statutory rate applied to earnings (loss) before
income taxes $ 25,750 $ 20,400
Increase (decrease) in income taxes resulting from:
State income taxes -- --
Other, including reserve for deferred tax asset $(25,750) (20,400)
-------- --------
Income tax expense $ -- $ --
======== ========
Temporary differences, consisting primarily of statutory differences between the
financial statement carrying amounts and tax bases of assets and liabilities
give rise to deferred tax assets and liabilities as of the respective years
ended September 30, 2004 and 2003.
Year ended September 30, 2004
------------------------------------------
Federal State Total
------- ----- -----
Deferred tax assets:
Other (current) $ 96,000 $ 35,000 $ 131,000
Net operating loss carryforwards (non-current) 932,000 77,000 1,009,000
----------- ----------- -----------
1,028,000 112,000 1,140,000
Valuation allowance (1,028,000) (112,000) (1,140,000)
----------- ----------- -----------
Net Deferred tax asset $ -- $ -- $ --
=========== =========== ===========
Deferred tax liabilities $ -- $ -- $ --
=========== =========== ===========
Year ended September 30, 2003
------------------------------------------
Federal State Total
------- ----- -----
Deferred tax assets:
Other (current) $ 96,000 $ 35,000 $ 131,000
Net operating loss carryforwards (non-current) 932,000 77,000 1,009,000
----------- ----------- -----------
1,028,000 112,000 1,140,000
Valuation allowance (1,028,000) (112,000) (1,140,000)
----------- ----------- -----------
Net Deferred tax asset $ -- $ -- $ --
=========== =========== ===========
Deferred tax liabilities $ -- $ -- $ --
=========== =========== ===========
F-11
CENTURY PARK PICTURES CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE H - INCOME TAXES - CONTINUED
During the years ended September 30, 2004 and 2003, respectively, the valuation
allowance increased (decreased) by approximately $-0- and $-0-. Realization of
deferred tax assets is dependent upon sufficient future taxable income during
the period that deductible temporary differences and carryforwards are expected
to be available to reduce taxable income.
NOTE J - COMMON STOCK TRANSACTIONS
On June 25, 2003, the Company issued an aggregate 53,783,500 shares of
restricted, unregistered common stock in redemption of various outstanding notes
payable in the face amount of approximately $300,000 and accrued interest
payable of approximately $237,835, pursuant to the conversion terms of the
respective notes. The valuation of this transaction was equal to the "fair
value" of the Company's common stock on the conversion date.
On December 3, 2003, the Company issued 8,675,800 shares of restricted,
unregistered common stock in redemption of two (2) notes payable in the face
amount of approximately $50,000 and accrued interest payable of approximately
$36,758, pursuant to the conversion terms of the respective notes. The valuation
of this transaction was equal to the "fair value" of the Company's common stock
on the conversion date. The Company relied upon Section 4(2) of The Securities
Act of 1933, as amended, for an exemption from registration of these shares and
no underwriter was used in this transaction.
On December 3, 2003, the Company issued 787,100 shares of restricted,
unregistered common stock as compensation for fees associated with the
conversion of the outstanding notes payable and accrued interest payable. This
transaction was valued at approximately $7,871, which was equal to the "fair
value" of the Company's common stock on the conversion date. The Company relied
upon Section 4(2) of The Securities Act of 1933, as amended, for an exemption
from registration of these shares and no underwriter was used in this
transaction.
NOTE K - COMMITMENTS AND CONTINGENCIES
The Company leases office space under a noncancellable operating lease that
expired on August 31, 2002. The space has been sub-leased to a separate company
owned by the Company's CEO. The Company incurred no expense related to this
lease during either of the years ended September 30, 2003 and 2002,
respectively, or subsequent thereto.
(Remainder of this page left blank intentionally)
F-12